With the launch of the latest iPhone expected Wednesday, some option traders turned to weekly contracts to profit if Apple hits a new high by Friday.

Bearish technical signs and a history of poor stock performance around the past four years of product launches suggest the need for caution. But option traders–heeding the advice to “think different”– remained largely bullish.

“Expectations couldn’t be higher for Apple right now. This thing is a monster,” said Steve Solaka, managing partner at Belmont Capital Group. “Usually we say, ‘Sell the news.’ But that’s not the way the options are trading. The options market is reflecting a lot of bullish activity.”

Apple shares fell $2.15, or 0.3%, to $660.59 Tuesday, after falling about 2.6% Monday. Apple shares finished last week at $680.44 — a new record — and are up 63% this year.

Four of the most in-demand option contracts Tuesday were positions that look for the shares to add at least 2.5% by Friday to pay off. Even at varying strike prices — with the weekly $665, $670, $675 and $680 calls all trading actively — the high price of Apple options means even the $665 calls need a move to about $677 to break even. For the other options, that level is even higher. The break-even price for a call option equals the price of the option contract plus the strike price.

Call options, generally perceived as bullish, grant the right to buy shares at a set price by a designated date.

The bullish option contracts were popular Tuesday even as technicians warned of a bearish sign in the behavior of Apple’s stock Monday.

The stock saw a bearish “key reversal” Monday — typically a warning of a short-term pullback that occurs when a stock rises above a previous trading day’s high before losing ground and finishing below the prior day’s lows.

But option traders remained largely bullish. As one technical analyst noted, this bearish signal has yet to hold back Apple shares this year. Though key reversals are typically reliable patterns, McClellan Market Report’s Tom McClellan noted Tuesday that the signals “do not have that good of a record” for Apple. A similar “key reversal” in February was followed by a 9.4% jump over the following two weeks rather than a downturn.

Overall, the options market was pricing in a 2.9% move for Apple shares by the end of the week, with the cost to employ a neutral strategy known as a “straddle” climbing to about $19 on Tuesday. The price for a straddle — a strategy involving the purchase of both put options, which grant the right to sell shares, and call options — is an indicator of how much a stock is expected to move following a scheduled event.

The straddle gets its name because of how it involves a leg on two sides of a price — one in calls and one in puts. The bet looks for the stock to move by more than the price paid for the strategy to profit.

Apple has a mixed record with recent product launches, as Apple shares have risen with each of the last three iPad releases and fallen with each of the four iPhone launches since 2008. Apple shares dropped 0.6% the day of the iPhone 4S event last October, while slipping 2% in June 2010 with the iPhone 4 introduction.

About 1 1/2 call options had traded for every put option as of late Tuesday afternoon.

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